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Kyat further up on dollar weakness

The kyat is now at K1,340 against the dollar. The Myanmar Times

The Myanmar kyat strengthened further last week after the Central Bank of Myanmar set its reference rate to K1,340 against the dollar last Thursday, its highest level in a year. The Central Bank had already set the reference rate higher atK1,345 earlier in the year.

Strength is returning to the kyat and across most ASEAN currencies on continued weakness in the dollar, which is down by 3.5 per cent against major currencies year-to-date.

The dollar continues to face heavy selling pressure on comments from US Treasury Secretary Steven Mnuchin about dollar weakness being good for US trade at the World Economic Forum in Davos, Switzerland, last week.

Mnuchin’s comments also came after President Donald Trump launched sanctions against Chinese solar panels and South Korean washing machines and after members of the Transpacific Partnership decided to go ahead with the trade pact without the US. Members of the North America Free Trade Agreement, which includes the US, are now also trying to reshape the 24-year-old agreement in favour of trade.

Analysts expect the dollar to remain weak in the coming weeks and expect no changes to the federal funds rate at the Federal Reserve’s upcoming meeting on Tuesday and Wednesday. “We look for no change in the target range of the federal funds rate following the 25 bp increase to 1.25pc-1.50pc at the December meeting,” they wrote in a report last Thursday.